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January 13, 2020

Fed should focus on fighting low inflation, official says

  • Persistent low inflation and low interest rates are a challenge for Fed policymakers because it means that they have less room to cut their benchmark interest rate in the event of a recession.
  • By CHRISTOPHER RUGABER
    AP Economics Writer

    WASHINGTON — A top Federal Reserve official believes that the U.S. central bank needs to re-orient its thinking and policies toward fighting inflation that is too low, rather than its historic focus on keeping inflation from getting too high.

    John Williams, president of the New York Federal Reserve Bank, said last week that the current environment of low inflation and low interest rates will likely persist for years. That is a challenge for Fed policymakers, because it means that they have less room to cut their benchmark interest rate in the event of a recession.


     
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